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Hydro 'disposition' resolution deferred

Councillor Marty Klein received two shocks upon his return from Florida to Tillsonburg Wednesday.

“One was the weather,” said Klein inside council chambers during open session, Thursday evening.

The second was the amount of phone calls and emails he received, pertaining to staff report

CAO 14-04 on proposed Resolution 4, recommending ‘That Tillsonburg Council as the sole shareholder of Tillsonburg Hydro Inc. (THI) approves the disposition (sale, merger, etc.) of Tillsonburg Hydro Inc. through the Request For Proposal (RFP) process.’

“As did most of you on this issue,” Klein continued.

Council, as the resolution recognizes, may in fact be the equivalent of a voting board of directors for town assets. But reaction both prior to and at Thursday’s council meeting – attended by members of the public including a former town CAO and two former mayors - made it clear the individual shareholders – Tillsonburg’s citizenry – had been electrified into action by public awareness passage of report CAO 14-04 could mean their hydro company was up for ‘disposition.’

And in a unanimous recorded vote to defer the report until a public forum could be established and input garnered, council acquiesced to the prudence of involving those individual shareholders more proactively in the process.

The actual deferral motion put forth by Klein and seconded by Councillor Dave Beres read: ‘Resolved that a vote on proposed Resolution 4 be deferred pending a public meeting to provide information, to receive input from the public. Further resolve that (CAO) Mr. Calder develop a format and report back at the meeting of March 24, 2014.’

Clerk Donna Wilson, as per direction from Mayor John Lessif, recorded supporting votes from all five councillors (Klein, Beres, Brian Stephenson, Mel Getty and Chris Rosehart), Deputy Mayor Mark Renaud and Mayor Lessif.

Unanimity in voting for deferral did not however, translate into uniform opinion around council chambers.

Listed as nominator, Beres stated the fact he was reading Resolution 4 was simply to get it on the table, and that he didn’t necessarily support its content.

Mayor Lessif prefaced Calder’s report with a ‘memo’, outlining his reasons for considering its recommendations. Lessif also emphasized ‘no decision had been made “at this time,” to sell or amalgamate THI.’

Calder opened by speaking to the definition of ‘disposition’, which some may have been confused as to mean ‘sell’. Disposition refers to a broader range of options clarified the town CAO, including possible sale, but also merger, amalgamation or partial share sale.

Calder emphasized the role of staff reports to help further discussion.

“But it’s not cast in stone,” he said, noting recommendations can be amended, revised or rejected outright.

“And it can be set aside and another recommendation come forward.”

A recommendation does not contain a presumption of what council will do, he reiterated.

“It is here for discussion.”

Calder’s report indicated THI’s 6,700-member client base is considered small (under 10,000) with limited growth potential. A provincial review board has suggested amalgamation for smaller entities such as THI.

“And there are some incentives around making that happen.”

Long-term considerations include maintaining competitive rates and safe and reliable delivery; the potential requirement to offer new services which may prove costly; and maintaining marketplace value for the shareholder.

The RFP process encourages a wider variety of proposals, and as a result, is intended to offer the best value for the shareholder.

“Value may mean many things,” said Calder, a definition for example including service, employee considerations and re-investment in the community. “Not just a dollar amount.”

Disposition process oversight would include council with THI board members as a resource supported by advisors with expertise in acquisitions and assets. Council would make the final decision, said Calder, which would be submitted to the provincial energy board for review and approval.

Costs for legal acquisitions and mergers, drafting legal documents and communications services were estimated to run between $150,000 and $350,000.

“Admittedly it’s not an inexpensive process,” said Calder, noting the broad range reflects potential disparities in complexity of any agreement along with the final disposition method. There would be an attempt, he added, to recoup some of those costs in a final agreement.

The process should also include a plan to use any resultant cash injection from sale, amalgamation or partial sale wisely. The CAO cited the example of a trust fund where the interest, rather than the principal is sourced.

Calder concluded by suggested the wording of the original resolution could have been better, with the intent to not approve disposition itself.

“The approval means approve a process of disposition.”

Former Tillsonburg mayor Cam McKnight, one of four Tillsonburg residents to take advantage of Mayor Lessif’s invitation to the gallery to speak on the issue, however spoke to the procedural reality of that resolution. As it read, stated McKnight, disposition was in fact the word in the resolution.

“I’m not sure how you can debate that without public input.”

Klein suggested a measure of alarm in public opinion and emails he had received were the result of “there hasn’t been any public discussion about this in the past,” combined with an assumption council has already made a decision.

“When in fact we haven’t.”

However, Klein suggested taking a step back and having a public forum, town hall meeting, or whatever, “so we can share with the community the reasons we gave David directions to bring this resolution forward.”

And at the end of the day, following considerable debate and discussion around the table illuminating a variety of different positions on disposition itself, the necessity for a portion of such a process to proceed ‘in camera’, and desirability for it to do so in a timely fashion; the deferral vote recognized the public’s right to be informed and provide input.

Further details on what form that combination will take, will be provided at the March 24 meeting of open council by Calder, or before as they become available.

 

Distroscale

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